Hyperinflation – for the United States, a myth?

Canada to follow U.S. into ‘fiscal cliff’ recession

Jim Flaherty, Canada’s Finance Minister, is reported as having said yesterday that if the America hits the so-called fiscal cliff on December 31 Canada will follow the U.S. into recession.
I believe that out of necessity U.S. politicians reluctantly will cooperate before, and perhaps even after December 31 (retroactive changes to scheduled deficit reductions and tax changes could always be made after December 31) to forestall U.S. fiscal cliff issues. However, consider that U.S. Federal deficit and debt ceiling (a separate issue from the ‘fiscal cliff’) eventually have to be dealt with.

I don’t see an obvious solution, other than further postponement, to America’s monthly net trade deficit and Federal deficit issues. Overspending always must lead to problems. In a ‘fiat currency and globalized world’, I believe this to be true even for the country enjoys the privilege of being able to print the world’s reserve currency.

Note my specific use of the word ‘enjoys’ in the context of the world’s reserve currency. America is not guaranteed that privilege, and no one in my view should think that it is.

You might want to read Economists Worry About Fiscal Cliff Resolution, from the Wall Street Journal’s Real Time Economics Blog. Written after Tuesday’s U.S. election results were known, the article cites the comparatively little change in the makeup of the Office of the President, the House, and the Senate as being worrisome in the context of bi-partisan cooperation in resolving fiscal cliff (and I assume ‘debt ceiling’) issues.

Greek Parliament approves austerity budget

Late yesterday the Greek Parliament by a narrow margin passed the austerity bill presented to it on Monday. This ought now to pave the way to enable Greece to receive further financial advances, thereby averting its November 16 sovereign debt repayment obligations.

That said, there may be much more to come on this unfolding story, as protests in Athens were reported as being somewhat violent as the bill was being debated – see

Hyperinflation – for the United States, a myth?

Many commentators continually forecast imminent hyperinflation in the developed countries. Seldom do these commentators defined hyperinflation, but some seem to think for a developed country that is an annual inflation rate at or above 20%. Of course, that number may simply be convenient because that is what the inflation rate in Canada and the United States ‘topped out at’ in the early 1980’s, before then Chair of the U.S. Federal Reserve Paul Volcker stepped in.

If you trade or invest in the financial markets, and particularly if you hold physical gold or silver directly or indirectly (through an ETF for example) I suggest you take the time to read and think about what is said in an article titled

U.S. Economic Chart Website

website if you are unaware of it. While its premium service is expensive at about $500 per month, it offers limited free access to a wealth of U.S. economic data in exchange for one’s e-mail address and password creation.

U.S. said to be only 12th most prosperous country – Legatum Institute

, a self-proclaimed “independent non-partisan public policy organization whose research, publications, and programmes advance ideas and policies in support of free and prosperous societies around the world” has just published a report saying that the U.S. has fallen out of the top 10 (to 12th) in ‘most prosperous country ranking’.

The survey, as shown in the following table, ranks countries on eight different attributes, and then consolidates those attributes into an ‘overall ranking’.

Whether or not meaningful or even accurate, it is at least interesting to note that out of 142 countries the United States is ranked:

20th as a world economy;

12th in ‘entrepreneurship and opportunity’. Think of that in the context of the American mantra of ‘we are the best at innovation’;

27th in safety and security; and,

only 14th in personal freedom, and interesting survey finding given the U.S. Constitution’s 1st (freedom of speech) and 2nd (right to carry arms) amendments.

Something to think about both generally, and in the context of the U.S. and world financial markets.

Highlight #3: If you trade or invest in the financial markets, and particularly if you hold physical gold or silver directly or indirectly (through an ETF for example) I suggest you take the time to read and think about what is said in an article titled

, a self-proclaimed “independent non-partisan public policy organization whose research, publications, and programmes advance ideas and policies in support of free and prosperous societies around the world” has just (in early November, 2012) published a report saying that the U.S. has fallen out of the top 10 (to 12th) in ‘most prosperous country ranking’.

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